Guidance note The Crown Estate – Escheat All general enquiries regarding escheat should be Burges Salmon LLP represents The Crown Estate in relation addressed in the first instance to property which may be subject to escheat to the Crown by email to escheat.queries@ under common law. This note is a brief explanation of this burges-salmon.com or by complex and arcane aspect of our legal system intended post to Escheats, Burges for the guidance of persons who may be affected by or Salmon LLP, One Glass Wharf, interested in such property. It is not a complete exposition Bristol BS2 0ZX. of the law nor a substitute for legal advice. Basic principles English land law has, since feudal times, vested in the joint tenants upon a trust determine the bankrupt’s interest and been based on a system of tenure. A of land. the trustee’s obligations and liabilities freeholder is not an absolute owner but • Freehold property held subject to a trust. with effect from the date of disclaimer. a“tenant in fee simple” holding, in most The property may then become subject Properties which may be subject to escheat cases, directly from the Sovereign, as lord to escheat. within England, Wales and Northern Ireland paramount of all the land in the realm. fall to be dealt with by Burges Salmon LLP • Disclaimer by liquidator Whenever a “tenancy in fee simple”comes on behalf of The Crown Estate, except for In the case of a company which is being to an end, for whatever reason, the land in properties within the County of Cornwall wound up in England and Wales, the liquidator may, by giving the prescribed question may become subject to escheat or the County Palatine of Lancaster. and the lord holding the superior interest, notice and with leave of the Court, in most cases the Sovereign, becomes Routes by which disclaim any onerous property. He may do this notwithstanding that he has entitled to take possession of it. This escheat arises principle applies whether the freehold title is taken possession of it, endeavoured registered or unregistered. This entitlement There are a number of ways that freehold to sell it, or otherwise exercised rights (not an obligation) is called ‘escheat’. properties may become subject to escheat of ownership in relation to it. As the to the Crown, including but not limited to: disclaimer takes place before the Only freehold properties may be subject to company is dissolved, the property does • Disclaimer by Treasury Solicitor escheat. In particular, the following do not not vest in the Treasury Solicitor as bona under the Companies Act fall within our remit: vacantia. The property may then become The Treasury Solicitor (bona vacantia subject to escheat to the Crown. • Leasehold properties. division – www.bonavacantia.gov.uk) • Rent charges. deals with all cases of ‘bona vacantia’ • On dissolution of a foreign company • Time share properties. – the term used to describe ‘lost’ The freehold property in England and • Freehold property abroad held by a property. The property of a company Wales of a dissolved foreign company British registered company. which has been dissolved may pass to may be subject to escheat to the Crown. the Treasury Solicitor in this way. • Mineral rights (where they exist as profits Such assets are not dealt with by the à prendre as opposed to an exception The Treasury Solicitor, however, may Treasury Solicitor as bona vacantia and reservation of land itself). disclaim any property which vests in the because the company is not formed and registered under the Companies Acts. • Freehold property owned by joint tenants Crown as bona vacantia. Freehold property (in this sense meaning the joint owners disclaimed by the Treasury Solicitor may A “foreign” company includes, in this of freehold property) only one of whom then become subject to escheat. context, one registered in any of the Channel Islands or in the Isle of Man. has been made bankrupt or has been • Disclaimer by trustee in bankruptcy dissolved. So, in the event of disclaimer or Official Receiver • On an Industrial and Provident Society of the interest of one joint owner in the It is open to a trustee in bankruptcy or (or Friendly Society) ceasing to exist property, the legal estate in the freehold an Official Receiver to disclaim property Any freehold property held by an does not escheat since it is not vested vested in a bankrupt. The effect of such Industrial and Provident Society may solely in that person or company but is a disclaimer of a freehold property is to be subject to escheat to the Crown if the Society is dissolved or otherwise Practice If the lender is not prepared to release ceases to exist. Mere cancellation of his charge, or if there are other claims The Crown Estate is not bound to dispose the registration of a Society does not, and the claimants indicate in writing of property subject to escheat, or to of itself, mean that the Society has that they do not propose to exercise dispose of such property to any particular necessarily ceased to exist. any rights that they may have under purchaser. Normal policy is to dispose of the Companies Acts or the Insolvency Freehold property held by a Friendly such property to an appropriate purchaser Act, a sale may still be arranged but the Society may also be subject to escheat where it is possible to do so. In the case of prospective buyer will be made aware in similar circumstances. a block of flats, the appropriate purchaser of the existence of the other claims will usually be such of the long lessees • On dissolution of a statutory company and will be given a copy of any relevant as want to participate. In the case of a Property may be subject to escheat correspondence with the other claimants. private road, the appropriate purchaser where such entities are dissolved by will usually be such of the adjoining Price statutory instrument, but freehold owners served by the road as want to property has been overlooked. Disposals are usually at market value. participate. Other cases will depend upon The Crown Estate has a statutory duty Subordinate interests and their merits. to secure best consideration in all the encumbrances – Liability of If an obvious candidate to have the circumstances of a disposal. A minimum the Crown property has grounds for applying to the consideration is payable in cases where there is no readily ascertainable market Escheat does not determine any Court for a Vesting Order, The Crown value but a disposal is nevertheless subordinate interests in the property in Estate may decide not to oppose that possible. question, such as a lease or mortgage, application. or any other encumbrances to which the The Crown Estate does not manage or Legal and valuation costs property is subject. The Crown will not, by insure properties subject to escheat. We normally recover a contribution to virtue of the property becoming subject to the legal costs incurred on a disposal and escheat, assume any liabilities in relation reimbursement of the cost of obtaining to such interests or encumbrances or of Procedure any appraisal of value. any other nature. The Crown is not a Enquiries received about properties successor in title to the freeholder and concerning which The Crown Estate has Burges Salmon LLP does not derive title under him. Only if, no information will be passed to the Issue January 2018 exceptionally, the Crown took possession Treasury Solicitor (Bona Vacantia Division). of the property, or committed an act of Other enquiries will be investigated and management in relation to the property, we will, as soon as we are able, give an might it assume any liabilities. Where indication of whether a disposal may be a property may be subject to escheat, possible and on what terms. the Crown is not the ‘owner’ in any conventional sense and does not have the We may initiate or require evidence of ordinary responsibilities of an owner. consultation with other appropriate persons. Duchy of Cornwall and Duchy of Lancaster If a disposal is a possibility we will require the interested party or parties to appoint Properties subject to escheat within a solicitor to act for them, which should the County of Cornwall or the County Who to contact be a single firm if they are more than one. Palatine of Lancaster fall to be dealt with by The Duchies, not The Crown Estate. If a mortgage or other charge exists over The County Palatine of Lancaster includes the property, the lender may be prepared the County of Lancashire and parts of to release his interest without requiring any Merseyside, Greater Manchester, Cheshire payment. A mortgagee holding a power and Cumbria. The solicitors to The Duchies of sale may sell under that power and The are Farrer & Co ([email protected]). Crown Estate will not be involved. www.burges-salmon.com Burges Salmon LLP is a limited liability partnership registered in England and Wales (LLP number OC307212), and is authorised and regulated by the Solicitors Regulation Authority. It is also regulated by the Law Society of Scotland. Its registered office is at One Glass Wharf, Bristol BS2 0ZX. A list of the members may be inspected at its registered office. Further information about Burges Salmon entities, including details of their regulators, Is set out on the Burges Salmon website at www.burges-salmon.com. © Burges Salmon LLP 2018. All rights reserved. Extracts may be reproduced with our prior consent, provided that the source is acknowledged. Disclaimer: This briefing gives general information only and is not intended to be an exhaustive statement of the law.